Mineweb.net – Posted on  ’13-DEC-05 07:00′ GMT – Archive

MINEWEB: Paul Walker joins us now from GFMS. He’s often been on the programme, but wow, Paul, you were quoted all over the world this morning – last week saying gold will go to $850! Now you’re normally sober and a bit conservative gent – what brought this on?

PAUL WALKER: Well, it was actually in a rather sober moment, strangely enough, for me, Alec. What I did say was that I thought there was a 50/50 chance that over the next 12- to 18-month timeframe, we could see $850/oz gold and I stand by that, you know. I have no problem defending that view. And really the arguments underpinning it are not that different to the ones that I’ve espoused probably much over the last 18 months on your show.

MINEWEB: It hasn’t been that aggressive though, Paul.

PAUL WALKER: Well, certainly not $850, but I think what I’ve been talking about is an environment in which gold, in dollar terms – but also I think the broader theme here has been one of not just a gold rally in dollar terms, but in various currencies, the euro, the yen, whatever you’d like to measure it by. The basic premise of that view has always been that the tipping point is coming in terms of where the dollar is at, where the US economy is at – and it’s always a difficult one to call. But as a house, GFMS has always been, certainly in the last 12 to 18 months, extremely bearish on the dollar. And when I think you look at where the physical markers have been, and this is a point I made on the show many times before, I think that when the price is right – OK, we’re at $520, $530 – well, the physical markets will be weak. But when the price does retrace, which it inevitably will do in the short term, the physical market will kick in, give this market another basis on which to rally further. And the view on $850 is very much one premised on, “Well, tell me when the tipping point is for the dollar – it’s going to come, and when that happens $850 gold is not unreasonable”.

MINEWEB: Paul, we’ve seen virtually every day – well, we have seen every day now in the last eight the gold price going up and, some days like today, $11, very significantly. What is driving it, what is driving this daily move?

PAUL WALKER: Well, I think it is an investment drive. I mean, there’s no doubt about it that this is from a broader community of investors, and there’s a very broad church of investors who are moving into gold at the moment. These are people from the hedge funds and the short-term speculative people, to people who are starting to wake up to the fact that we are in an environment in which the value of their dollar assets, whatever they may be – bonds, equities and so on and so forth, are starting to look a little more vulnerable than they have before, in spite of the fact that the dollar did appreciate against the euro in the last few months. And I think that judgement is starting to bear fruit in terms of investment in gold, and in our view this is something that’s set to continue for some considerable time. I think in the short term, again if your listeners are trading on a short-term basis, could you see a sharp correction in gold from here? Of course you could. But the trend is definitely upwards, and if you are a buy-to-hold investor, my view is that this market has still got some way to run. If you’re trading on a short-term basis, well, you could see a correction, but that’s really where the market’s at, at the moment. It’s investor-driven and it will remain that way for some considerable time unless we see a significant retracement of the gold price, in which case the physical marks will come in and support this price.

MINEWEB: From London, GFMS’s chief executive Paul Walker. As I say, he’s been quoted all over the world this morning and over the weekend.

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